CompUSA: 1984-2008 Once-Dominant PC Retailer to be Sold Off and Liquidated Andy Patrizio
CompUSA, the computer and electronics retailer founded in 1984 and once a major PC retailer in the country, will be no more come early 2008.
Mexican billionaire Carlos Slim, who owned a majority stake in the firm, has sold it to the restructuring and investment firm that closed half of its stores earlier this year.
Boston-based Gordon Brothers Group now has to liquidate what's left. It is believed CompUSA TechPro, its technical services business, and CompUSA.com, its online sales operation, will be sold to new owners.
"An orderly and expedited wind-down and asset sale process is the best option for CompUSA and its creditors," said Bill Weinstein, a principal at Gordon Brothers, in a statement. Mr. Weinstein was named interim president of the firm.
Representatives for Gordon Brothers did not immediately return calls for comment.
The chain's 103 retail stores will remain open and staffed during the holiday season, with discounts ahead of the planned store closures. The stores will begin closing in January.
CompUSA closed 126 stores earlier this year in a bid to refocus. Clearly the amputations didn't help.
"There aren't too many instances, especially with retailers, of cutting themselves back to salvation," said Stephen Baker, vice president with market research firm NPD. "It happens, but more often than not it doesn't."
Baker said that for a long time, CompUSA had smart people working the counter. "They were the real geeks, the guys working there in the mid-to late-90s. That was the best place to be. They got all the cool stuff first. That was the place," he said.
But then the PC market changed and CompUSA didn't evolve fast enough. Many companies emulated Dell's successful direct model. Online vendors like TigerDirect.com and NewEgg.com became popular with home system builders. Apple began to favor its own stores starting in 2001, denying CompUSA the chance to ride Apple's huge comeback.
CompUSA didn't embrace the home system builder who assembled their own PCs, and when it did, its offerings were meager. Baker also faulted the company for blowing it when it comes to support. While Best Buy has gotten a lot of mileage and margin out of Geek Squad, CompUSA never could.
"They didn't know how to use the tech services they had. You see how tech services are hot now? CompUSA had it for years but they never knew how to use it," he said.
For the big name firms selling through CompUSA — HP, Acer, Gateway, Cisco, Intel, and AMD — Baker figures the pain will be minimal because there are so many other retail outlets to take up any slack.
HP, the top PC vendor in the world with 37 percent of the market according to IDC, saw the writing on the wall and made appropriate plans. The company said it doesn't anticipate any impact from the loss of 100 stores, given it has 23,000 retail outlets in the U.S. alone.
"We saw this going on with CompUSA when they closed 123 stores earlier this year and adjusted our business model," said Ann Finnie, a spokesperson for HP's desktop PC business. "We're still gaining market share even with them closing stores."
Gateway declined to comment on its post-CompUSA plans while Acer did not respond to inquiries by press time.
Some of the smaller or more obscure vendors might suffer for the loss of the chain, however.
"The more specialized stuff probably won't be sold at Best Buy or Staples," Baker said. "But then again, they've been planning for it for a while — since the first round of store closings."
While CompUSA is ailing, Baker said the rest of retail is holding up fine. Best Buy continues its high growth rates, mall-based game retailers EB Games and Gamestop "are making money hand over fist," and Micro Center, a chain of just 21 stores, continues to do very well thanks to diverse offerings, strong knowledge of its customer base, and a large selection of private label product, said Baker.
